Saving money early is one of the most important things you can do for retirement. You have to try to save as much money as possible in order to reach your goal for the amount of money you want for retirement. The more you save, the earlier you can retire, and the more money you can retire with. Compound interest works in that you earn interest on interest on interest. When you put 100,000 dollars into the bank, you earn 1% of that yearly, but it is paid to you by 1/12 of 1% monthly. So earning 1/12 of 100,000 dollars in a month would be earning $83.33. But the next month, the $83.33 would get interest built up onto it as well. So the next month you’d be receiving 1/12 of 1% of $100,083.33. Therefore, you’d earn $83.40 the next month, rather than $83.33. Granted, it’s not a lot more money. (That’s why you put money into stocks, bonds, CDs, real estate, etc. as well.) But this process is what is called compound interest.
Andy Lipson was interviewed on Tuesday, November 6th at 9:00 PM. Interview Recording
Saving money early is one of the most important things you can do for retirement. You have to try to save as much money as possible in order to reach your goal for the amount of money you want for retirement. The more you save, the earlier you can retire, and the more money you can retire with. Compound interest works in that you earn interest on interest on interest. When you put 100,000 dollars into the bank, you earn 1% of that yearly, but it is paid to you by 1/12 of 1% monthly. So earning 1/12 of 100,000 dollars in a month would be earning $83.33. But the next month, the $83.33 would get interest built up onto it as well. So the next month you’d be receiving 1/12 of 1% of $100,083.33. Therefore, you’d earn $83.40 the next month, rather than $83.33. Granted, it’s not a lot more money. (That’s why you put money into stocks, bonds, CDs, real estate, etc. as well.) But this process is what is called compound interest.
Andy Lipson was interviewed on Tuesday, November 6th at 9:00 PM.
Interview Recording
https://docs.google.com/spreadsheet/pub?key=0Avu6mYTeczRVdFg2b3l0UG1JZUs2SHVTdUlNZnlOaFE&single=true&gid=0&output=html
By doing this budget, I learned that saving money is important, and you really have to watch what you spend. My salary was about
$35,000 dollars a year, and to buy a 159,000 dollar house, I had to cut out some other spending, including not being able to eat as much
of the good food as I'd like to, and having a lower allowance to go out and do stuff. But I really made my money work. With my money I
bought a car, a newly built house, and a nice phone plan. I also was able to save a lot of money, even with all of these things I bought. It
is pretty hard to be able to balance a budget while still being able to do things you'd like to do on a low salary.